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Russia: Finance Minister Defends International Loans

Moscow, 15 July 1998 (RFE/RL) - Russian Finance Minister Mikhail Zadornov today defended Russia's $22.6 billion aid deal with international lenders, saying Moscow received the most favorable loan terms possible. Zadornov, speaking before an extraordinary session of the State Duma, the lower house of parliament, said interest on the largest part of the loans -- from the International Monetary Fund (IMF) -- was between 4.6 and 4.8 percent. He said the interest on smaller credits from the World Bank and Japanese government was even more favorable.

Zadornov said most of the loans are planned to be used to boost central bank reserves to back the ruble and stablize Russia's financial markets. He said Moscow would not be forced to break up the Gazprom and Unified Energy Systems monopolies in exchange for the loans, which were announced Monday.

Zadornov called on Duma lawmakers to quickly approve a package of government austerity measures aimed at securing the release of the loans this year and next.

By early afternoon the Duma had approved only a few minor bills, including one on protecting the rights of foreign investors.

Prime Minister Sergei Kiriyenko, speaking to reporters on a visit to the Russian republic of Dagestan, said he believed the Duma would approve the bulk of the measures and that the government's plan would be in effect by August 1.

He said that if the opposition-dominated chamber did not pass all the necessary legislation in its special session which ends tomorrow, the government was prepared to act through decrees or presidential edicts.

Trading on the Russian stock market was stable today, following two days of rallies spurred by optimism over the new international loan package.